Sequester of U.S. defense next fiscal crisis to avert

ecretary of Defense Leon Panetta laid out the stark future if automatic cuts take effect in March. About $45 billion in Pentagon cuts would have to be made in a seven-month time frame.

OUR VIEW

The fiscal-cliff mess that Congress and the White House faced on New Year's Day was mostly avoided when income tax rates were made permanent. Yet danger lurks in this new year because Washington only took care of one of the problems — taxes. Much more unpleasantness for the economy and national security is coming. It's time for a real compromise on spending. Congress and President Barack Obama saw massive tax increases coming in 2013 yet they still went over the cliff for a day. On New Year's Day, they hammered out an agreement. Income taxes went up for 2013 only on families making more than $450,000. Yet the cliff was only partially averted. Large, ill-advised cuts to defense spending could still affect national security and the economy. If defense-related layoffs are wide enough, the automatic cuts could cause a national dip back into recession. On Thursday, Secretary of Defense Leon Panetta laid out the stark future if automatic cuts take effect in March. About $45 billion in Pentagon cuts would have to be made in a seven-month time frame. Pentagon officials aren't quite sure how they would make the cuts in such a short period of time. And the cuts would have to be made around operational spending on the war in Afghanistan, meaning domestic spending on training, readiness and U.S. bases would get hit extra hard. Panetta said readiness could see a 20 percent cut and the U.S. Army itself could get hit with a 30 percent cut. That means Florida bases could see massive cuts. It would also mean layoffs or furloughs for hundreds of thousands of civilian defense workers. Again, this all happens during wartime. This automatic cut — or sequester — was devised in 2011 during debt-ceiling negotiations between the Republican-held House of Representatives and the White House. The idea of sequestering was reportedly the brainchild of Jack Lew, now Obama's nominee to be secretary of the Treasury. The idea was that sequester — more than $500 billion aimed at the Pentagon over 10 years, with an equal amount of cuts aimed at social spending programs, including Medicare — would force an eventual compromise. The sequester itself was too ugly an option for Obama and Congress to let happen. And indeed it is. Congress and the White House are essentially playing brinkmanship with each other. The nation, however, will lose if negotiations fall apart. Congress and the White House must balance the budget over time, and defense must be included in the process. The most important targets are the unsustainable entitlements, especially Medicare. Defense in particular will yield a nice "peace dividend" as the war ends in Afghanistan. Congress must also look at closing a number of expensive bases in Europe and Japan, bases that are no longer needed. But defense cuts — indeed, all the sequester-related cuts — need to be well devised and planned. Congress should cancel all the sequester cuts in favor of targeted reductions, made regularly over the next decade until the annual budget deficits are reduced to near zero. The sequester is not the way to get there. It could exact a dangerous toll on defense and national security.